Groupon IPO Dismissed By Barron's: 'This IPO Is One Deal To Avoid'

(Reuters) - Investors may want to avoid Groupon Inc's high-profile IPO this week because the deals and coupon website operator has an unproven earnings record and slow growth, according to Barron's newspaper.

Groupon is considering raising the price range in its initial public offering, set for Thursday, as underwriters grow more confident about demand. The company is considering raising the IPO price range and could file an amended IPO prospectus early next week, a source told Reuters this past week.

But Groupon's lack of earnings, slowing growth, and challenges from competitors including Google and Facebook casts a shadow on any initial rise in the shares, Barron's said.

"Any price gain would have less to do with the company's strategic plan than its strategy to milk its IPO for all it's worth," the newspaper said in its October 31 issue.

"A $10 billion market value is a lot for a company with no profits and an unproven business model," it added. "This IPO is one deal to avoid."

(Reporting by Jonathan Spicer)
Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[Abatis]

10:02 AM on 11/02/2011

Ha... given the opportunity, literally every single one of you would buy this stock at the strike price.

[tooncesrocks]

06:36 AM on 11/01/2011

Groupon oversells their deals and it HURTS small businesse BADLY...
Groupon knows about this and they continue to do it and later say "oops",,,

bad...

[Dh Barr]

07:45 PM on 10/31/2011

Unless Groupon has some patent on their business model or process, there is nothing to prevent anyone else from doing the same thing (Facepons anyone?).

That said, the USPTO gave Apple a "Patent" on the idea of swiping your finger on a touchscreen to unlock your phone, so who knows what other idiocy is coming.

[Abatis]

09:46 AM on 11/02/2011

The very same thing can be said for Facebook though, can't it? I mean there aren't any significant patents protecting that social networking giant but I'm still not worried about Myspace swooping in and making a comeback. Social networks are brands so that patents on business processes aren't as vital.

[Matthew Mills]

04:25 PM on 10/31/2011

What a scam Groupon is this company will be out of money soon. There are so many rivals doing the same thing groupon is also, a lot of companies are getting annoyed by losing money off of groupon.

[psnyder325]

10:50 PM on 10/31/2011

Yeah, we are. My company offered a Groupon and never again. We only had a limited number and when they ran out, we still had to give the deal to avoid bad PR. A good company to stay away from!

[ecrichert12]

03:53 PM on 10/31/2011

Sad reading all these comments from people who haven't read the S-1 (or any s-1 for that matter).

Not doing your homework and complaining when you don't do well in the stock market (missing good investments or making bad ones) is all too common these days,

[Alvin Jackson]

03:03 PM on 10/31/2011

Groupon should have took the 6 billion!

[drunkarate]

01:48 PM on 10/31/2011

If Groupon has a significant IPO, it will be the first sign of the next dot com bubble.

[Karel Appel]

02:16 PM on 10/31/2011

now now, you cant't have another bubble until you finish this one.

[KarolinaReiss]

01:45 PM on 10/31/2011

This is what I have learned from the Groupon chapter: GAAP stands for Groupon Altered Accounting Principles.

[matt spedale]

01:41 PM on 10/31/2011

Groupon's business model doesn't always help it's clients and there are too many copycats out there that have already cut into them. I would be avoiding Groupon like the plague.

[Matthew Mills]

04:32 PM on 10/31/2011

i agree with you.

[ema123]

01:09 PM on 10/31/2011

Good I hope the Media continues to the job of wall street. Use to be, years ago, wall street did the due diligence before taking a company public. Noe all wall street does is look for ways to make a quick buck by defrauding investors. Good for Barrons!!!!

[Tperl]

12:32 PM on 10/31/2011

No profits, bad business model and an expectation of $10bn for the IPO? Yep, I want to sink my money into the stock market.

[Dunkleberger Karl]

12:19 PM on 10/31/2011

No BBBrrrAAAiiiNNNNssss!

[kimhoulian]

12:07 PM on 10/31/2011

As with Pandora the sentiment is harsh but true.

[matt spedale]

01:44 PM on 10/31/2011

Pandora is still a better bet than groupon. Pandora has done a great job of integration with products of all sorts. Pandora's stock will eventually rise but I wouldn't bet more than 30% in the next three years. Groupon? No way.

[kimhoulian]

02:27 PM on 10/31/2011

what makes me reluctant to invest in pandora is the fear that Pandora will have the same end as past online music operators. The high royalties they will pay out as listeners increases and the rate for mobile advertising that remains low. It is said the operating cost will be extremely high up until 2013 for this company so whether they are profitable is debatable since the only revenue is from ads at this time.Also they are spending 48% in licensing and royalties now. But I do get your point

[fopplssiegeparty]

11:55 AM on 10/31/2011

This will indeed be an excellent opportunity to short.

Having said that, I have never had the courage to actually short and the short ETF's are a scam.